Bentley University's endowment fund relies on the usual assortment of institutional money managers, but in a twist it has handed over a small portion of the fund to be managed by a student investment group. So far, their track record is impressive.
Formed in 1997, the Bentley Investment Group (BIG) currently oversees roughly $520,000 in its long-only equity portfolio--just a tiny fraction of the Waltham, Mass.-based university's overall endowment of roughly $150 million (as of June 30, 2009).
The group was originally given a $250,000 lump-sum to work with and has had no other inflows since, meaning that it has more than doubled it's initial kitty during the past 13 years despite two market crashes and the stock market's lost decade during the '00s.
"We don't do any hedging with derivatives or shorting or use short ETFs," says Brice Soucy, BIG's president and the student manager of Bentley's Trading Room. He says BIG's portfolio consists mainly of U.S.-based public companies and U.S.-listed ADRs. It has no bonds and cash is its only hedge.
"That's been a useful hedge of late," says Soucy, a senior from Sterling, Mass., with a double major in economics and finance and a minor in accounting. He notes that the fund beat its benchmark during the most-recent fiscal year (ended June 30, 2009)--a 19.12% loss versus a 27.91% loss for the Wilshire 5000.
During the same period, Bentley's overall endowment took a nearly 43% hit, according to the school's fiscal year 2009 financial statement.
Any Bentley student can join BIG regardless of their academic major. The group currently has about 150 general members. Of that, there are roughly 30 analysts who track six specific industries--consumer, energy, financial, healthcare, materials/industrials and technology.
The analysts apply for openings at the beginning of each semester and must have an investment background either through internships or involvement in Bentley's Trading Room. An executive board of student leaders oversees the analysts.
The Trading Room facility has state-of-the-art research tools such as Bloomberg, FactSet, Thomson Reuters and Morningstar. It's also integrated into Bentley's academic curriculum.
"Because the BIG portfolio is part of the university endowment, they must present to the university's investment committee like any of its investment managers," says Richard Gibble, a former hedge fund analyst and current Bentley finance department faculty member who oversees the Trading Room. "The portfolio is long-only equity because the university has other managers for the rest of its strategic allocation."